Melco International to Raise Over 100 Million Dollars Through Rights Issue

Melco International Development Ltd, listed on the Hong Kong Stock Exchange, is preparing to raise as much as HKD781.1 million (about US$100.7 million). The casino group’s parent company announced a rights issue involving up to 759,350,377 new shares. Current shareholders will be able to buy one new share for every two existing shares at a subscription price of HKD1.0286 each.

Good to know

• Melco International plans to raise over HKD781 million through a rights issue.
• Shareholders will have the chance to maintain their ownership levels by participating.
• The move is focused on strengthening the balance sheet and reducing existing debt.

Controlled by entrepreneur Lawrence Ho Yau Lung, Melco International made clear that the decision is centered on improving its financial position. According to a stock exchange filing made at the end of last week, proceeds from the rights issue will help the company pay off part of an outstanding credit facility, due for repayment later this year, along with related interest costs.

The company explained its approach by stating, “In light of the company’s current capital structure, the board considers that it is appropriate to raise new capital in the form of equity to pay down a portion of the company’s existing debt, strengthen its balance sheet and enhance the capital structure for long-term development.”

Looking at the available options, Melco International said it had evaluated multiple fundraising strategies. Eventually, it chose the rights issue route, arguing that it offers a fair opportunity for all shareholders to maintain their stakes while participating in the company’s future growth. The company noted that the rights issue would also allow qualifying shareholders the option to sell their entitlements in the open market if they prefer to realize cash instead.

Financial figures shared in Friday’s filing revealed that Melco International’s total assets were around HKD84.75 billion at the end of last year. Meanwhile, outstanding interest-bearing borrowings, after accounting for deferred financing costs and debt modification adjustments, reached about HKD60.69 billion.

The company’s gearing ratio, which measures financial leverage, has climbed to 71.6 percent. That marks a sharp rise from 42.4 percent recorded as of June 30, 2019. The board’s decision to move forward with equity fundraising reflects a focus on addressing this higher debt level and positioning the business for longer-term stability.

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